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2019 (12) TMI 1221 - AT - Income TaxOrder passed by the Addl. JCIT u/s 92CA (3) - Disharge of function of Transfer pricing officer (TPO) by the additional Commissioner Of Income Tax - assessee submitted that order passed u/s 92CA was passed by The Additional Commissioner Of Income Tax and he is not the authorised officer to pass such an order - HELD THAT:- Here it is not the case of the assessee that the additional Commissioner of income tax who passed the order of the transfer pricing under section 92CA (3) of the act was not authorised by the central board of direct taxes to perform all or any of the functions of an assessing officer specified u/s 92C of the Act. Here it is not the case of the assessee that the additional Commissioner of income tax who passed the order of the transfer pricing under section 92CA (3) of the act was not authorised by the central board of direct taxes to perform all or any of the functions of an assessing officer specified u/s 92C of the Act. Thus we hold that, the order passed by the additional Commissioner of income tax u/s 92CA (3) of the income tax act is appellate order passed by a transfer pricing officer in case of the assessee for assessment year 2002 – 03. In view of this, the additional ground raised by the assessee in the cross objection is dismissed. Cost for working out PLI of the assessee for benchmarking international transactions - Whether third-party cost should be included in the total cost of the assessee for providing marketing support services and therefore markup thereon should also be placed to determine the arm’s-length price of the market support and services fee on by the assessee? - In this case the agreement between the assessee and the associated enterprise was not produced before the lower authorities. In absence of examination of such agreement with the actual conduct of the parties, it cannot be decided that what are the ‘operating costs’ incurred by the assessee for marketing support services functions, therefore, the order of the learned CIT – A cannot be sustained. Further, we do not find that on what basis certain cost not allocated to the marketing support function of the assessee have been accepted by the learned CIT – A. No basis has been given for accepting the contention of the assessee by him. As the assessee has also produced the agreement between the associated enterprise and the assessee now (it was not before the learned assessing officer, the transfer pricing officer or before the learned CIT appeal) before us, there is no explanation with respect to what is the operating cost as well as what is the indirect overhead on which the assessee is required to be remunerated, the whole issue is required to be set aside to the file of the learned Assessing Officer/Transfer Pricing Officer with a direction to the assessee to produce all relevant agreement as well as to demonstrate the conduct of the assessee in accordance with those agreements , and to justify what the parties mean by the ‘operating cost’ and ‘indirect overhead’. Thereafter the learned transfer-pricing officer may determine the arm’s-length price of the market support service fee, which would have been charged by an independent party to the associated enterprise. Accordingly, we set aside this issue to the file of the learned transfer-pricing officer accordingly. Thus, ground number one of the appeal of the learned assessing officer challenging the order of the learned CIT – A, wherein it has been held that no mark up was required on 3rd party cost incurred by the taxpayer on account of sales promotion, marketing and other expenses and expenses incurred for distribution of the digital satellite receiver for which dealers/agents were engaged and also the commission paid to dealers and agents for selling such digital satellite receiver is allowed for statistical purposes as per above directions.
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